① With the much-anticipated 2024 election year coming to a close, an alternative competition seems to have already shown winners and losers in the US stock ETF market... ② In the past few years, political-themed ETFs tracking the investment activities of "Capitol Hill stock god" Pelosi and other legislators have thrived in the US market; ③ and this year, the top one is an ETF named "God Bless America" (code: YALL).
With the much-anticipated 2024 election year coming to a close, an alternative competition seems to have already shown winners and losers in the US stock ETF market...
In the past few years, political-themed ETFs tracking the investment activities of "Capitol Hill stock god" Pelosi and other legislators have thrived in the US market. This year among these ETFs, the Fund tracking Democratic legislators' investments $UNUSUAL WHALES SUBVERSIVE DEMOCRATIC TRADING ETF (NANC.US)$ (named after Nancy Pelosi), does not seem to offer the highest ROI...
The top one is an ETF named "God Bless America" ( $GOD BLESS AMERICA ETF (YALL.US)$ ) in the ETF.
This ETF, which leans towards the conservative faction, has an ROI of 32.9% this year, significantly exceeding$S&P 500 Index (.SPX.US)$the 26%. A major reason for the strong performance of this Fund is that its largest holding company is$Tesla (TSLA.US)$—with Musk-supported Trump achieving a great victory in this year's election, Tesla has surged nearly 70% in the past two months.
$GOD BLESS AMERICA ETF (YALL.US)$ launched in 2022, this Fund seeks to invest in U.S. listed companies "with a record of creating jobs for Americans," while excluding companies that "sacrifice maximizing Shareholder returns due to emphasizing political activities and social agendas," and is therefore often regarded as a Fund product positioned against ESG investing.
Of course, despite the Democratic Party's disastrous defeat in this year's USA election, the investment returns of the Congressional Democrats, known as the "stock gods," have not been too severely impacted.
In fact, some of the favorite Technology stocks of the Democrats have become the main force behind the rise of US stocks after the election, helping the Nasdaq reach new highs amidst the weakening Dow.
In comparison, the Fund NANC, named after former House Speaker Nancy Pelosi, which tracks the trading of Democratic Congress members and their spouses, achieved an ROI of 28.6% as of last Friday this year.
In contrast, the version of the Fund for Republican lawmakers $UNUSUAL WHALES SUBVERSIVE REPUBLICAN TRADING ETF (KRUZ.US)$ (named after Texas Senator Cruz) has an ROI of only 14.7%. KRUZ mainly invests in Energy stocks.
Political-themed ETFs are facing a 'bottleneck'.
Overall, among the eight political-themed ETFs tracked in the industry, the performance is actually not that good— $GOD BLESS AMERICA ETF (YALL.US)$ and $UNUSUAL WHALES SUBVERSIVE DEMOCRATIC TRADING ETF (NANC.US)$ It is already one of the two Funds that have outperformed the S&P 500 Index this year.
Despite severe polarization in the USA, politically themed Funds have not attracted significant capital this year—although the Fund under Vivek Ramaswamy, who co-leads DOGE with Musk, $STRIVE 500 ETF (STRV.US)$ has seen significant Inflow, most of the other such Funds currently do not exceed $0.3 billion in asset size.
The rule of thumb is that Institutions tend to avoid Funds with asset sizes of less than $0.3 billion. 2nd Vote Advisers liquidated and closed two conservative-themed ETFs last year because they failed to attract investor interest.
Itzhak Ben-David, a professor at Ohio State University's Fisher College of Business and a researcher at the National Bureau of Economic Research, stated that the problem with themed ETFs is that they often上市 when the investment concept is at or near its peak. His research shows that these ETFs, which focus on a specific hot area, often lag the Large Cap benchmark by about 30% within five years.
Ben-David said, "This was the case in 1929 (on the eve of the Great Depression), and it is the same today. If you read or see something in the news or on Television, you might not be the first one to notice it. Maybe you are among the last, and the prices have already reflected that information."
Arthur Laffer Jr., president of Laffer Investments, stated that the biggest factor determining the success of any ETF is good marketing. Funds that focus on political themes aim to differentiate themselves, which is their gimmick, but to continually attract buyers, they must be able to generate excess returns or prove that they can reduce investment risk.
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